Insurance companies have sold a lot of terrorism coverage. A stand-alone terrorism market has developed, with capacity of about $1 billion. Prices have moderated hugely. These prices include the actuarial expectation that the insurer will pay 100 percent of the terrorism loss.

To come in now, as the U.S. Senate bill would do, with free reinsurance covering up to 90 percent of the claims is a windfall for the insurers. Who could deny that?

Of course, the Risk and Insurance Management Society supports the bill. It represents large buyers of insurance who might have the clout to get some of the premiums back when the risk is sharply cut when a federal bailout occurs (or, at least, negotiate big reductions on renewal).

We would, I suppose, favor free reinsurance for auto and home insurance so we could try to get premiums down for beleaguered individual insurance buyers. But we doubt the insurers would pass that savings through, either.

And a question: Why is it when you agree with a position we take you never call us “self appointed,” but always do when you want to oppose our stance? Who appointed you to label us in this fashion?

J. Robert Hunter
Director of Insurance
Consumer Federation of America
Washington, D.C.

Reproduced from National Underwriter Property & Casualty/Risk & Benefits Management Edition, July 29, 2002. Copyright 2002 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.